Redefining "affordable"
According to the government, affordable housing is defined as, “Homes let at least 20% below local market rents (affordable rental properties) or let at rates set between market rents and social rents (intermediate rental properties).The market rent or market value refers to the cost of housing either for rent or for sale in the private sector.”
But when we look at the current housing market, rental and home prices are still unobtainable for some. Over the last year alone, according to Zoopla, average rental prices in the UK rose 7.2% - with the highest increases seen in the North East at 9.9% and a 9% increase in the North West. And while there has been a slight reduction in house prices across the UK in the last year, both current inflation and cost of living are providing further hurdles for home buyers.
With a shortage of affordable homes and rising property and rental prices making it difficult for many individuals and families to find suitable housing, those participating in the LPDF panels felt there is a demand to redefine what “affordable housing” actually means, encompassing the diverse economic realities across every region.
The seminar discussions highlighted the necessity for affordable housing to be genuinely accessible, considering the local income levels and the "lost middle" – those ineligible for traditional social housing yet priced out of market rates.
Collaborative solutions and rethinking delivery
Another common thread in the seminar discussions was the need for collaborative approaches that break down silos within the sector to deliver on increasing demands for affordable housing.
Breaking down these silos isn’t just about increasing the supply of affordable housing, but also ensuring that developments meet the nuanced needs of different communities.
In order to facilitate better collaboration across the industry, this involves the consideration of alternative delivery models, such as joint ventures or tenanted stock transfers, and ensuring early involvement of Registered Providers (RPs) in the planning stages.
The impact of financial constraints on RPs
During the panel discussions, experts reiterated the significant challenges faced by RPs due to financial constraints and the evolving landscape of government policies. These factors are profoundly affecting RPs' capacity to engage in new projects effectively.
The dialogue brought to light a pressing necessity for the establishment of stable funding frameworks. Such frameworks should be designed to provide consistent support, enabling RPs to engage in long-term strategic planning and investment initiatives for upcoming developments.
Furthermore, there was a collective recognition of the importance of these funding models in addressing not only the initial costs of new projects, but also in adequately catering to the ongoing maintenance and retrofitting expenses associated with existing properties.
In essence, the discussions highlighted the imperative for comprehensive financial strategies that encompass both short-term project viability and long-term sustainability, ensuring the resilience and success of the affordable housing sector amidst dynamic economic and regulatory environments.
The viability and delivery challenge
Speakers delved into the challenges RPs face when delivering on Section 106 agreements, including mix and quality issues, and the changing economic landscape affecting borrowing and funding. They also discussed the potential for local authorities to create their own RPs to pick up stock, underscoring the need for more adaptable planning policies that can accommodate evolving market demands.
Policy recommendations
To address the immediate challenges, suggestions included standardising affordable housing definitions and revising the Local Housing Allowance (LHA) to reflect the costs of newly built properties. For the long-term, there was a call to reform Section 106, ensuring mandatory affordable housing exemptions apply across all tenures.
